Latest losses due to shift from licenses to new IPs

EA has published its latest financial results today, with the news not looking good for over 1,100 members of staff. The company announced 12 EA facilities worldwide are to close as part of the publisher's latest round of cost-cutting measures.

Downturns are never fun to report on (unless you are an evil misanthrope that takes pleasure in other's misfortunes) yet there is one aspect of this particular story about EA's latest financial woes that many news outlets are perhaps overlooking.

"One of the issues that I have not seen many talk about is the transition that EA has steadily been making over the last few years from a company heavily dependent on third-party licences to one whose fortunes rest more on its own IP [intellectual property]," says analyst Nick Gibson, from Games Investor Consulting.

Hollywood investment in games

"All of the major Hollywood studios have been ramping up their investment in the games sector over the last few years, steadily moving up the value chain and claiming parts of the pie that their licensees (such as EA, THQ, Activision, etc) have spent years making money from."

What many commentators have failed to note, as Gibson points out, is that "EA recognised this early on and pre-empted it by refocusing its investment on original IP."

EA's decision to take a long-term strategy, as opposed to sticking to what it knew with its traditional licensed cash cows to fill up the coffers in the short-term should certainly be applauded.